KCB kicks off hunt for new boss of Ugandan subsidiary

Corporate News

Customers at a KCB banking a hall in Juba. Photo/FILE 

By VICTOR JUMA

In Summary

KCB had targeted cut its cost-to-income ratio to below 50 per cent this year on a leaner and more efficient workforce.

KCB Group has started the search for a new head of its Ugandan business after retirement of former CEO Albert Odongo.

Joram Kiarie, previously the lender’s director for mortgages, has been acting as KCB Uganda chief executive following Mr Odongo’s exit last month. KCB has invited candidates to apply for the position, intending to appoint a substantive replacement in the next few weeks.

“Albert Odongo opted to retire and pursue other interests in the month of May,” KCB said in a statement. Mr Odongo had served in the position since 2010.

More than six executives and directors have exited their positions at KCB in the past two years on personal volition and also as a result of corporate restructuring of the lender. Some of the executives who have left the bank in the past one year are Charles Maranga who was the HR director, Kirop Malakwen (company secretary), and Fred Mutiso (director of audit).

KCB had targeted cut its cost-to-income ratio to below 50 per cent this year on a leaner and more efficient workforce.

Standard Investment Bank said the bank’s management expects the ratio of its staff costs to total income to decline to 24.9 per cent this year, down from 28.9 per cent last year.

Uganda is one of six markets in the East African region where KCB has expanded in the past decade to grow its earnings. There are 26 banks operating in Uganda, including subsidiaries of Equity, and DTB.

The neighbouring country has presented significant growth opportunities but also stiff competition for Kenyan lenders, with I&M Bank being the latest local bank to announce plans of venturing into that market.

The country is set to amend its banking laws to allow for the introduction of agency banking, Islamic banking, and mobile money, a move that is expected to significantly boost access to financial services.

KCB and Equity pioneered the regional banking strategy, with the two top lenders now focusing on consolidating their regional units that have reduced their reliance on the Kenyan market.

KCB said the combined pre-tax profits of its regional units rose 60 per cent to Sh2.4 billion last year compared to Sh1.5 billion in 2012. This saw the subsidiaries contribute 11.5 per cent of the bank’s total pre-tax earnings last year.

Uganda, Rwanda, Tanzania, and Burundi and South Sudan have fewer banks compared to Kenya’s 43 lenders. Uptake of formal financial services is also relatively low, signaling a significant growth potential in the coming years amid increased economic growth.

The economies of Uganda, Tanzania, and Rwanda, for instance, are projected to grow 6.6, 7.4, and 7.5 per cent respectively this year, according to projections by the World Bank.

The high growth rates enhanced their appeal to local lenders that have raised billions of shillings from shareholders and strategic investors to fuel their outward growth.

KCB posted a 28.7 per cent growth in net profit to Sh3.9 billion in the first quarter, maintaining its position as the country’s largest and most profitable lender. Its share price has gained 11.8 per cent over the past six months to trade at Sh49.75.